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Hempel studied mathematics, physics, and philosophy at the University of Göttingen, Heidelberg and Berlin. In Göttingen he encountered David Hilbert and was impressed by his attempt to base all of mathematics on solid logical foundations derived from a limited number of axioms (Hilbert's Program). Having moved to Berlin he participated in a congress on scientific philosophy in 1929, where he met Rudolf Carnap and became involved in the Berlin Group of philosophers that was associated with the Vienna Circle. In 1934 he received his doctoral degree from the University of Berlin with a dissertation on probability theory.
The same year he fled the increasingly repressive Germany and emigrated to Belgium with the help of Paul Oppenheim, with whom he co-authored the book "Der Typusbegriff im Lichte der neuen Logik" on typology and logics in 1936. In 1937 Hempel emigrated to the US where he accepted a position as Carnap's assistant at the University of Chicago. Subsequently he held positions at New York's City College of New York (1939-1948), Yale University (1948-1955), and Princeton University where he taught alongside Thomas Kuhn, and stayed until he was given emeritus status in 1964. As an emeritus he spent the years from 1964-1966 at the Hebrew University in Jerusalem. He became University Professor of Philosophy at the University of Pittsburgh in 1977 and taught there until 1985.

He never embraced the term "logical positivism" as an accurate description of the Vienna Circle and Berlin Group in which he had participated during the years between the World Wars, preferring to describe those philosophers, and himself, as "logical empiricists."

Hempel believed that the term "positivism", with its roots in August Comte, invoked a materialist metaphysic that empiricists need not embrace. He regarded Wittgenstein as a philosopher with a genius for stating philosophical insights in striking and memorable language, but believed that Wittgenstein (or at least, the Wittgenstein of the Tractatus) made claims which could only be supported by recourse to metaphysics. To Hempel, metaphysics were anathema, involving claims to know things which were not knowable, that is, advancing hypotheses incapable of tending to be confirmed or disconfirmed by evidence.

In 2005 the City of Oranienburg renamed a street to "Carl-Gustav-Hempel-Straße".